As an important pathway in embryonic development, hedgehog signaling plays a role in stem cell maintenance, cell differentiation and tissue remodeling. Amounting evidence indicate that hedgehog signaling is frequently activated in a variety of human cancer. Several recent studies indicate a critical role of hedgehog signaling in regulation of tumor microenvironment. The molecular mechanisms underlying this regulation, however, remain largely elusive. We have generated data to support that hedgehog signaling regulates tumor immune surveillance. We showed that myeloid-derived suppressor cells (MDSC) differentiation from bone marrow cells in the absence of hedgehog-mediated signaling was not efficient, and that epidermis-specific activation of hedgehog signaling yielded accumulation of MDSC in spleen, peripheral blood and skin. Our central hypothesis in this proposal is that hedgehog signaling creates an immune suppressive environment through regulation of MDSC population, which is in parallel with hedgehog signaling-mediated cell proliferation that promotes carcinogenesis. We propose three specific aims to test our hypothesis. First, we will define how Hh signaling regulates MDSC formation. Second, we will identify the critical role of TGF? in Hh-mediated regulation of MDSC. Third, we will determine the significance of IL-17 for Hh signaling-mediated tumor development. Linking Hh signaling to the immune suppressive tumor microenvironment will further our understanding of Hh signaling in cancer development, which may permit the design of novel strategies for the treatment and prevention of cancer.